House Bill 1498

AN ACT TO CREATE THE HURRICANE KATRINA ELECTRIC UTILITY
CUSTOMER RELIEF AND ELECTRIC UTILITY SYSTEM RESTORATION ACT; TO ESTABLISH A
MECHANISM BY WHICH THE MISSISSIPPI PUBLIC SERVICE COMMISSION MAY AUTHORIZE AND
CERTIFY AN ELECTRIC UTILITY FINANCING ORDER AND THE STATE MAY ISSUE GENERAL
OBLIGATION BONDS TO PAY THE COSTS OF REPAIRING DAMAGE TO THE SYSTEMS OF
ELECTRIC UTILITIES CAUSED BY HURRICANE KATRINA; TO AUTHORIZE ELECTRIC UTILITIES
TO PETITION THE PUBLIC SERVICE COMMISSION FOR THE ISSUANCE OF A FINANCING ORDER
WHICH, WHEN TRANSMITTED TO THE STATE BOND COMMISSION BY AN ELECTRIC UTILITY,
AUTHORIZES THE ISSUANCE OF BONDS TO PAY THE COSTS ASSOCIATED WITH RESTORING THE
SYSTEM OF THE ELECTRIC UTILITY; TO PROVIDE THE CONTENTS OF SUCH A PETITION; TO
AUTHORIZE THE PUBLIC UTILITIES STAFF TO CONDUCT AN INDEPENDENT INVESTIGATION OF
THE PETITION; TO ESTABLISH THE DUTIES OF THE PUBLIC SERVICE COMMISSION WITH
REGARD TO SUCH PETITIONS; TO PROVIDE FOR THE CONTENTS OF FINANCING ORDERS; TO
PROVIDE THAT THE FINANCING ORDER SHALL REQUIRE THE ELECTRIC UTILITY TO COLLECT
A SYSTEM RESTORATION CHARGE FROM ITS RETAIL CUSTOMERS SUFFICIENT TO PAY THE DEBT SERVICE ON ANY BONDS
ISSUED PURSUANT TO THE FINANCING ORDER; TO PROVIDE FOR ANNUAL ADJUSTMENTS TO
THE SYSTEM RESTORATION CHARGES TO ENSURE THAT THE CHARGES ARE SUFFICIENT TO PAY
THE DEBT SERVICE ON ANY BONDS ISSUED PURSUANT TO THIS ACT; TO PROVIDE THE
METHOD FOR APPEALING DECISIONS OF THE PUBLIC SERVICE COMMISSION WITH RESPECT TO
A FINANCING ORDER; TO PROVIDE FOR THE DURATION OF A FINANCING ORDER; TO
AUTHORIZE THE ISSUANCE OF STATE GENERAL OBLIGATION BONDS IN AN AMOUNT NOT TO
EXCEED THE AMOUNT SPECIFIED IN THE FINANCING ORDER TO BE UTILIZED BY AN
ELECTRIC UTILITY TO PAY THE COST OF REPAIRS NECESSITATED BY HURRICANE KATRINA;
TO AUTHORIZE THE CREATION OF SINKING FUNDS INTO WHICH SYSTEM RESTORATION
CHARGES COLLECTED BY THE ELECTRIC UTILITY SHALL BE DEPOSITED AND TO PROVIDE
THAT MONEY IN THE SINKING FUNDS SHALL BE UTILIZED TO PAY THE DEBT SERVICE ON
BONDS ISSUED PURSUANT TO A FINANCING ORDER; AND FOR RELATED PURPOSES.

BE
IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION
1. This
act shall be known and may be cited as the "Hurricane Katrina Electric
Utility Customer Relief and Electric Utility System Restoration Act."

SECTION
2. It
is hereby determined and declared to be the policy of the State of Mississippi,
for the benefit of customers of the electric utilities within the state that
the state establish a mechanism by which the Mississippi Public Service
Commission may authorize and certify an electric utility financing order and
the state may issue system restoration bonds pursuant to that financing order,
the proceeds from which shall be used to securitize the system restoration
costs and storm damage reserve levels of those electric utilities affected by
Hurricane Katrina, thereby providing electric utility customers relief from
traditional methods of recovering system restoration costs. The exercise of powers conferred by this act
are the performance of essential public purposes.

SECTION
3. As
used in this act:

(a) "Commission" or "Public
Service Commission" means the Mississippi Public Service Commission.

(c) "Electric utility" or
"utility" means any utility as defined in Section 77-3-3(d)(i), but
not including electric power
associations.

(d) "Eligible
funds" means any funds derived from any source which may by law or other
authorization be used to retire any obligations arising from or connected with
the issuance of system restoration bonds.

(e) "Financing
costs" means:

(i) Interest and acquisition, defeasance or
redemption premiums that are payable on system restoration bonds issued
pursuant to this act;

(ii) Any amount required to fund or replenish any
system restoration sinking fund or other account established pursuant to the
authority conferred under this act and the terms of any financing order or
other financing documents pertaining to system restoration bonds; and

(f) "Financing
order" means an irrevocable final order issued by the Public Service
Commission pursuant to Section 4 of this act which provides a mechanism for an
electric utility to request the State Bond Commission to authorize the issuance
of system restoration bonds and the creation of system restoration property.

(g) "Issuance
costs" means:

(i) Any initial payment made on or before issuance
and any amount required to fund any system restoration sinking fund or other
account established pursuant to the authority conferred under this act and the
terms of any financing order; and

(i) "Storm"
means Hurricane Katrina, which made landfall in the state on August 29, 2005,
and caused catastrophic damages to the people and property of and within the
State of Mississippi, including electric utilities and their facilities
throughout the state, and which has been declared a natural disaster by
proclamation, dated September 2, 2005, of the Governor of the State of
Mississippi.

(j) "System restoration
activity" means any activity or activities by or on behalf of an electric
utility in connection with the preparation for and the restoration of service
associated with electric power outages affecting customers of an electric
utility as the result of the storm, including, but not limited to,
mobilization, logistical support staging, housing, fueling, contracting and
construction, reconstruction, replacement or repair of electric generation,
transmission or distribution facilities and related activities approved by the
commission.

(k) "System
restoration bonds" or "bonds" means those bonds, including
refunding bonds, that are issued by the State Bond Commission pursuant to this
act.

(l) "System
restoration charge" means the mechanism and amounts authorized by the
Public Service Commission to recover, finance or refinance the system
restoration bonds, financing costs and any other cost necessary to otherwise
ensure the timely payment of system restoration bonds and other required
amounts and charges payable in connection with the system restoration bonds to
be imposed on, and as a part of, all customer bills and collected by an
electric utility or its successors or assignees, or a collection agent, through
a charge that is separate and apart from the base rates of the electric
utility, which charge shall be paid by customers, including special contract
customers, for and with regard to all electric load directly or indirectly
connected to electric facilities of the electric utility or its successors or
assignees under the Public Service Commission approved rate schedules, even if
the customer elects to purchase electricity from an alternative electricity
supplier following a fundamental change in regulation of public utilities in
this state.

(m) "System
restoration costs" means, at the option and request of the electric
utility, and as approved by the commission pursuant to Section 4 of this act,
those prudent incremental costs incurred or to be incurred, as determined by
the commission, by an electric utility in undertaking a system restoration
activity. Such costs shall be net of
applicable insurance proceeds and, where determined appropriate by the
commission taking into account the interests of the electric utility's
customers, the need for financial stability in the provision of electric
utility service, and the public interest, and such costs shall include
adjustments for normal capital replacement and operating costs and other
potential offsets and adjustments; however, such costs shall not include system
outage related lost profits. System
restoration costs may, in the commission's discretion, include the costs to
finance any deficiency or deficiencies in storm damage reserves incurred before
such time as the system restoration bonds are issued and any costs of retiring
any other existing indebtedness relating to system restoration activities.

(n) "System
restoration property" means:

(i) All rights and interests of the state
arising out of or in connection with the issuance of system restoration bonds
under this act, including the right to receive the system restoration charges,
as periodically adjusted, imposed, billed, collected and transferred by the
electric utility on behalf of the state pursuant to a financing order, and the
right to obtain periodic adjustments to such charges as provided in the
financing order and this act. System
restoration property shall not be an asset of the electric utility; but, the
electric utility shall have only a duty to carry out its obligations and responsibilities
under this act and the State Bond Commission action taken under this act with
respect to system restoration property; and

(ii) All collections,
claims, rights to payments, payments, money or proceeds arising from the rights
and interests specified in subparagraph (i), regardless of whether such collections, claims, rights to payment, payments, money or
proceeds are imposed, billed, received, collected, or maintained together with
or commingled with other collections, rights to payment, payments,
money or proceeds.

(o) "Storm
damage reserve" means an electric utility storm reserve or such other
similar reserve, as may be amended from time to time, established by law, rule
or pursuant to any order of the commission.

(p) "Mississippi
Public Utilities Staff" means those persons employed by the public
utilities staff established in Section 77-2-1.

SECTION 4. (1) Not more than
one hundred twenty (120) days after the effective date of this act,an
electric utility affected by the storm may petition the Public Service
Commission for a financing order to make such determinations as are provided
for in this section which, when transmitted by an electric utility to the State
Bond Commission as provided in this act, authorizes the State Bond Commission
to issue system restoration bonds. In
addition to any other information required by the Public Service Commission,
the applying electric utility shall:

(a) Describe the system restoration activities
that the electric utility has undertaken or proposes to undertake and describe
the reasons for undertaking the activities.

(b) Set forth the known prudently incurred
system restoration costs and an estimate of the costs of any system restoration
activities that are not completed, or for which the costs are not yet known, as
identified and requested by the electric utility.

(c) Set forth the storm damage reserve that the
electric utility proposes to establish or replenish and that such electric
utility has determined would be appropriate to recover through system
restoration bonds. The electric utility
shall also identify the level that the electric utility is funding or will seek
to fund through other means, together with a description of the factors and
calculations used in determining the amounts and methods of recovery.

(d) Indicate whether the electric utility
proposes to finance all or a portion of the system restoration costs and storm
damage reserve using system restoration bonds.
If the electric utility proposes to finance a portion of such costs, the
electric utility shall identify that portion in its application.

(e) Estimate the financing costs and issuance
costs related to the system restoration bonds.

(f) Describe and estimate the system restoration
charge necessary to recover the system restoration cost and fund or replenish
the storm damage reserve, including any financing costs and issuance costs and
the period for recovery of
such costs.

(g) Estimate any cost savings and demonstrate
how it would avoid or significantly mitigate rate impacts to customers
resulting from financing system restoration costs with system restoration bonds
as opposed to the traditional method of recovering such costs from customers
and through alternative financing methods available to the electric utility.

(h) File with the Public Service Commission
direct testimony supporting the application.

(i) Timely provide the Public Service Commission
or the Mississippi Public Utilities Staff such additional information and
documentation as they may reasonably request.

(j) Provide a copy of the petition to the State
Bond Commission.

(2) When deemed necessary by the Executive
Director of the Mississippi Public Utilities Staff, the Mississippi Public
Utilities Staff may conduct its own independent investigation as to the
electric utility's petition for a financing order subject to and within the
time limitations prescribed in this act.

(3) (a)
Proceedings on an application submitted pursuant to subsection (1) of
this section shall begin with a petition by an electric utility and shall be
disposed of in accordance with the provisions of Section 77-3-47 and applicable
Public Service Commission procedural rules, except that the provisions of this
section, to the extent applicable, shall control. The issuance of a financing order, the system restoration bonds
and the implementation or adjustment of a system restoration charge under this
act shall not constitute a change in rates pursuant to Section 77-3-37 or 77-3-39.

(i) Within seven (7) days after the filing of an
application, the Public Service Commission shall issue a scheduling order, which
sets a hearing date and provides for the issuance of a financing order not more
than one hundred twenty (120) days after the date the petition is filed.

(ii) Not more than one hundred twenty (120) days
after the date the petition is filed, the commission shall issue a financing
order or an order rejecting the petition.
A party to the Public Service Commission proceeding may petition the
commission for reconsideration of the financing order not more than seven (7)
days after the date the financing order is issued. The Public Service Commission shall rule on the petition for
reconsideration, by and through the issuance of a final financing order upon reconsideration,
not more than fourteen (14) days after the filing of the petition. A failure by the Public Service Commission
to act upon such petition for reconsideration within the specified time period
shall be deemed a refusal of the petition, and the financing order shall remain
in effect. Any judicial review shall be
as provided in Section 5 of this act.

(iii) Upon issuance of a final financing order to
an electric utility, the electric utility shall have sixty (60) days from the
issuance of the financing order to request the State Bond Commission to issue
system restoration bonds and the State Bond Commission shall authorize and
issue the system restoration bonds as soon as commercially practicable.

(iv) If financing orders are issued to more than
one (1) electric utility, the State Bond Commission may aggregate multiple
financing orders into a single issue of system restoration bonds so as to
reduce the costs of issuance.

(b) In a financing order issued on behalf of an
electric utility, the Public Service Commission shall:

(i) Specify the amount of prudently incurred
system restoration costs and the level of storm damage reserves, taking into
consideration, to the extent the Public Service Commission deems appropriate,
any other methods used to recover these costs.

(ii) With advice from, and in consultation with,
the State Bond Commission and any outside consultant or counsel, provide a
description and estimate of the amount of financing costs which may be
recovered through system restoration charges and the minimum and maximum period
over which such costs may be recovered.

(iii) Determine that the financing method proposed
pursuant to this act is reasonably expected to result in lower overall costs or
would avoid or significantly mitigate rate impacts to customers as compared
with alternative methods of financing or traditional methods of recovering
system restoration costs.

(iv) Provide that, for the period specified
pursuant to subparagraph (ii) of this paragraph, the imposition and collection
of the system restoration charge authorized in the financing order shall be
paid by customers receiving transmission or distribution service from the
electric utility or its successors or assignees under Public Service Commission
approved rate schedules or under special contracts, even if the customer elects
to purchase electricity from an alternative electric supplier following a
fundamental change in regulation of public utilities in the state.

(v) Set forth the level of the storm damage
reserves and any limitations on how the reserve may be held, accessed or used.

(vi) With advice from, and in consultation with,
the State Bond Commission and any outside consultant or counsel, the Public
Service Commission shall establish and employ a mechanism for making
expeditious periodic adjustments in the system restoration charge that
customers are required to pay under the financing order and for making any
adjustments that are necessary to correct for any overcollection or undercollection
of the system restoration charge or to otherwise ensure the timely payment of
system restoration bonds, financing costs and any other required amounts and
charges payable in connection with the system restoration bonds.

(vii) Specify the system restoration property to
be created in favor of the state upon the issuance of system restoration bonds
to secure prompt payment of the system restoration bonds and any associated
financing costs and any other required amounts and charges payable in connection
therewith as they shall come due.

(viii) With advice from, and in consultation with,
the State Bond Commission and any outside consultant or counsel, specify, to
the extent possible, the terms and conditions of the system restoration bonds,
including, but not limited to, repayment schedules, maximum interest rates,
issuance costs, financing costs, and any other required amounts and charges
payable as they shall come due.

(ix) Provide that the system restoration charge
be allocated to the customer rate classes in the same manner that each such
class is allocated its portion of the electric utility's annual base rate
revenues using the criteria set out in Section 77-3-33 and the commission's
rules.

(x) Provide that upon the issuance of system restoration
bonds, the electric utility shall institute the resulting initial system
restoration charge in accordance with the financing order and such initial
system restoration charge shall be effective upon the issuance of such system
restoration bonds without further action of the Public Service Commission.

(xi) Require the electric utility to file
supplemental monthly reports with the Public Service Commission detailing any
system restoration activity undertaken and any system restoration costs incurred
after the issuance of system restoration bonds. Such filing shall be made in such form and with such detail as
the financing order or any prior order issued to an electric utility by the
Public Service Commission in connection with the storm may provide.

(xii) Include any other conditions that the Public
Service Commission or the State Bond Commission considers appropriate and that
are not otherwise inconsistent with this act.

(c) In performing any of its responsibilities
under this subsection, the Public Service Commission may engage outside
consultants or counsel, including, but not limited to, the State Bond
Commission. Any expenses associated
with such services shall be included as part of financing costs and included in
the total amount of system restoration bonds issued pursuant to this act.

(d) If the Public Service Commission issues a
financing order and the system restoration charge is collected, the electric
utility shall file with the Public Service Commission at least once annually a
petition or a letter requesting the Public Service Commission to review the
system restoration charge established in the financing order and make any
necessary adjustments described in paragraph (b)(vi) of this subsection. Upon receipt of the petition, the Public
Service Commission shall notify the State Bond Commission, and the State Bond
Commission shall perform an audit of the appropriate system restoration sinking
fund. The Public Service Commission
shall, with advice from, and in consultation with, the State Bond Commission
and, if desired, any outside consultant or counsel, determine the appropriate
amount of any overcollection or undercollection of the system restoration
charge and the amount of any adjustment that may be required. The adjustments shall ensure the recovery of
revenues sufficient to provide for the payment of principal and interest when
due on system
restoration bonds approved under a financing order. Within thirty (30) days after receiving an electric utility's
petition or letter pursuant to this paragraph, the Public Service Commission
shall, if necessary, revise the system restoration charge and notify the
electric utility of such revision, or, if no revision to the system restoration
charge is required, the Public Service Commission shall so notify the electric
utility.

(e) Upon the Public Service Commission's
revision of a system restoration charge and timely notification to the electric
utility, the electric utility shall promptly adjust the system restoration
charge to become effective the next practicable billing cycle as specified in
the Public Service Commission's notification of such revision.

(f) Subsequent to the issuance of system
restoration bonds authorized by a financing order, the financing order shall be
irrevocable except as provided in this act.
The Public Service Commission may not amend, modify or terminate the
financing order by any subsequent action or reduce, impair, postpone, terminate
or otherwise adjust the system restoration charge approved in the financing
order. After the issuance of a
financing order, the electric utility retains sole discretion to request the
system restoration bonds be issued.

(g) At the request of an electric utility, the
Public Service Commission may commence a proceeding and issue a subsequent
financing order that authorizes the retirement or refunding of system
restoration bonds issued pursuant to the original financing order if the Public
Service Commission finds that the subsequent financing order satisfies all of
the criteria specified in this subsection.
Effective on retirement of the system restoration bonds and the issuance
of new system restoration bonds, the Public Service Commission shall adjust the
related system restoration charge accordingly.

(h) An electric utility shall have sixty (60)
days from the issuance of a final financing order to request the State Bond
Commission to authorize the issuance of system restoration bonds. Upon such request, the State Bond Commission
shall authorize and issue the system restoration bonds as soon as
practicable. If no such request is made
by the electric utility within sixty (60) days from the issuance of the final
financing order by the Public Service Commission, the financing order shall
stand repealed.

SECTION 5. A party to a proceeding on a petition for a financing order
may appeal the financing order, after reconsideration as provided for in this
act, by direct appeal to the Mississippi Supreme Court. An appeal must be filed within seven (7)
days after the petition for reconsideration has been refused or deemed refused,
or within seven (7) days after the issuance of the final financing order upon
reconsideration. Every appeal shall
briefly state the nature of the proceedings before the Public Service
Commission, and shall specify the final financing order, upon reconsideration,
complained of. Upon the filing of an
appeal, the Clerk of the Mississippi Supreme Court shall serve notice of the
appeal upon the Public Service Commission, and the Public Service Commission
shall, within twenty-one (21) days after the service of the notice, certify to
the court the record in the case, which shall include a transcript of all
testimony, together with all exhibits or copies of the exhibits, all pleadings,
orders, findings and opinions entered in the case. The parties and the Public Service Commission may stipulate that
a specified portion of the record shall be certified to the court as the record
on appeal. Every appeal of Public
Service Commission financing orders shall take precedence over other cases as a
matter affecting the public interest, and the court shall docket and dispose of
the appeal at the earliest time compatible with the ends of justice. The court may hear and dispose of the appeal
in termtime or vacation, and the court may sustain or dismiss the appeal, or
modify or vacate the order complained of in whole or in part, as the case may
be. In case the order is wholly or
partly vacated, the court may also, in its discretion, remand the matter to the
Public Service Commission for such further proceedings not inconsistent with
the order of the court as, in the opinion of the court, justice may
require. The final financing order upon
reconsideration shall not be vacated or set aside either in whole or in part,
except for errors of law, unless the court finds that the order of the Public
Service Commission is not supported by substantial evidence, is contrary to the
manifest weight of the evidence, is in excess of the statutory authority or
jurisdiction of the Public Service Commission, or violates constitutional
rights. If the Mississippi Supreme
Court remands the matter to the Public Service Commission for further
proceedings, the Public Service Commission shall enter a final financing order
upon remand not more than thirty (30) days from the time of receipt of the
mandate of the court.

SECTION 6. Except as provided in this act, a financing order shall:

(a) Remain in effect until the system
restoration bonds issued pursuant to the order have been paid in full and the
commission-approved financing costs of the system restoration bonds have been
recovered in full.

(b) Remain in effect and unabated
notwithstanding the bankruptcy, sale, transfer, reorganization, merger or
dissolution of the electric utility or its successors or assignees.

SECTION 7. (1) System
restoration bonds issued pursuant to a financing order shall not be the debt of the electric
utility. System restoration charges
paid under any financing order shall not be considered the revenue of the
electric utility for any purpose, including any evaluation of the electric
utility made pursuant to a formula-type rate of return rate plan established in
Section 77-3-2. System restoration
costs or financing costs, issuance costs and other costs specified in the
financing order shall not be considered the costs of the electric utility.

(2) System restoration bonds shall not be used
to finance any project, addition, plant, facility, extension, capital
improvement, equipment, or any other expenditure, unless the electric utility
has filed a petition under this act to finance such expenditure using system
restoration bonds. No action taken by
an electric utility pursuant to a financing order issued under this act shall
be deemed to be unjust or unreasonable.

SECTION 8. (1) (a) All system restoration property that is
specified in a financing order shall constitute an existing, present property
right or interest of the state in the property, notwithstanding that the
imposition and collection of a system restoration charge depends on the
electric utility to which the financing order is issued performing its
servicing functions relating to the collection of the system restoration charge
and on future provision of electric service.
System restoration property shall exist whether or not the revenues or
proceeds arising from the property have been billed, have accrued, or have been
collected and notwithstanding the fact that the value or amount of the property
is dependent on the future provision of service to customers by the electric
utility or its successors or assignees.

(b) System restoration property specified in a
financing order shall continue to exist until the system restoration bonds issued pursuant to
the financing order are paid in full and all financing costs and other costs of
the bonds have been recovered in full.

(c) All system restoration property specified in
a financing order shall be pledged to secure system restoration bonds issued
pursuant to the financing order.

(d) The electric utility shall have no right to
nor any interest in the system restoration property other than the obligation
to collect the system restoration charges and transfer those charges to the
state as directed in any financing order and any resolution of the State Bond
Commission.

(e) The interest of the state in the system
restoration property specified in a financing order issued to an electric
utility, and in the revenue and collections arising from that system
restoration property, is not subject to setoff, counterclaim, surcharge or
defense by the electric utility or any other person or in connection with the
reorganization, bankruptcy or other insolvency of the electric utility or any
other entity.

(f) Any successor to an electric utility,
whether pursuant to any reorganization, bankruptcy or other insolvency
proceeding, or whether pursuant to any merger or acquisition, sale or other
business combination, or transfer by operation of law, as a result of electric
utility restructuring or otherwise,
shall perform and satisfy all obligations of, and have the same rights under a
financing order as, the electric utility under the financing order in the same
manner and to the same extent as the electric utility, including collecting and
paying to the person entitled to receive the revenues, collections, payments or
proceeds of the system restoration property.

SECTION 9. (1) A special fund, to be designated the
"Hurricane Katrina Electric Utility Customer Relief and Electric Utility
System Restoration Fund," is created within the State Treasury. The fund shall be maintained by the State
Treasurer as a separate and special fund, separate and apart from the General
Fund of the state. Unexpended amounts
remaining in the fund at the end of a fiscal year shall not lapse into the
State General Fund, and any interest earned or investment earnings on amounts
in the fund shall be deposited into such fund to the credit of the appropriate
account.

(2) The expenditure of money deposited into the
fund shall be under the direction of the commission, and such funds shall be
paid by the State Treasurer upon warrants issued by the commission upon
requisitions submitted by electric utilities and approved by the commission
pursuant to an exclusive procedure developed by the State Bond Commission with
advice from, and in consultation with, the commission. This procedure shall be incorporated in the
State Bond Commission's resolution authorizing the sale of the bonds. Money deposited into the fund shall be
disbursed to electric utilities from the appropriate account to pay the costs
associated with system restoration activity by the electric utility that is
necessary as a result of the storm.

(3) There shall be created accounts in the fund
for each electric utility for which a financing order is issued. The proceeds of system restoration bonds
issued pursuant to a financing order shall be allocated to the account of the
electric utility for which the financing order was issued.

(4) Immediately upon the deposit to the fund of the
proceeds of the system restoration bonds, electric utilities shall be entitled
to requisition disbursements from the appropriate account of the fund
sufficient to recover the system restoration costs incurred by the electric
utility prior to the date of the deposit of the proceeds of the system
restoration bonds if the costs are approved by the commission in the financing
order issued to the electric utility.
An electric utility may requisition disbursements from the appropriate
account of the fund for costs incurred after the deposit to the fund of the
proceeds of system restoration bonds if the costs are approved by the
commission in conjunction with the financing order.

(5) The primary purpose of this act being to
serve the public good and to benefit the public as a whole, any distributions
of the bond proceeds to recover system restoration costs pursuant to this
section are intended to be contributions to the capital of the electric utility
companies making the requisitions.

SECTION 10. (1)
For the purpose of providing for the payment of the principal of and
interest upon bonds issued under the provisions of this act, the State
Treasurer shall establish in the State Treasury a system restoration bond
sinking fund for each electric utility for which bonds are issued under this
act pursuant to a financing order. Each
sinking fund shall consist of the system restoration property required to be
deposited into the fund by an electric utility pursuant to this act and such
other eligible funds as may otherwise be designated for deposit therein. Funds required in excess of the amounts
available in the system restoration bond sinking fund established for an
electric utility to pay the principal of and interest when due upon bonds
issued pursuant to a financing order issued for the electric utility pursuant
to the provisions of this act shall be appropriated from the State General
Fund. Unexpended amounts remaining in a
sinking fund at the end of a fiscal year shall not lapse into the State General
Fund, and any interest earned or investment earnings on amounts in a sinking
fund shall be deposited into the sinking fund.

(2) All system restoration property received by
an electric utility shall be deposited in the sinking fund of the electric
utility not less than monthly upon receipt by the electric utility. The State Treasurer shall mandate the manner
in which such deposit shall be made.

(3) Any eligible funds other than system
restoration property received by a participating electric utility or the state
from any source for the purpose of financing or meeting system restoration
costs shall be paid into the system restoration sinking fund of each
participating electric utility in proportion to their obligation for the
payment of the system restoration bonds.
If such funds are directed to the state, the state shall determine the
amount of money it would have directed to a participating electric utility in
the absence of the participation of the electric utility, and direct that
amount to the system restoration sinking fund of the participating electric
utility.

(4) The money in each bond sinking fund
established for an electric utility pursuant to this act shall be used to pay
the principal and interest on system restoration bonds issued under a financing
order issued to the electric utility when due, and shall, when advisable, be
paid as soon as possible to reduce the bonded indebtedness secured by that
fund. It is the purpose of this act to
ensure that the system restoration bonds are retired as soon as possible,
consistent with the terms of the bonds, the costs involved and the best
interests of the electric utility customers to be benefited.

(5) The State Bond Commission shall submit to
the Public Service Commission an accounting of the sinking funds at the same
time as an electric utility files a petition under Section 4(3)(d) of this
act. The commission shall consider this
audit when considering any adjustment to the system restoration charge.

(6) When the State Bond Commission determines
that a system restoration sinking fund or system restoration sinking funds are
sufficient to retire the outstanding bonds, it shall certify this to the
commission in writing. The State Bond
Commission shall retire the bonds not more than sixty (60) days after such
certification. Any unexpended amounts
remaining in the sinking fund following the retirement of the bonds shall be
credited to the State General Fund.

(7) Upon the retirement of the bonds, the
electric utility shall immediately petition the Public Service Commission for a
determination on the collection of system restoration charges from electric
utility customers.

SECTION 11. (1)
An electric utility desiring the issuance of system restoration bonds
pursuant to a financing order shall deliver a timely request to the State Bond
Commission. Upon receipt of such
request, the State Bond Commission, in its discretion, may act as the issuing
agent, prescribe the form of the bonds, advertise for and accept bids, issue
and sell the bonds so authorized to be sold, and do any and all other things
necessary and advisable in connection with the issuance and sale of such
bonds. With advice and consultation
from the commission, the State Bond Commission shall determine the amount of
bonds to be issued; however, the amount of bonds issued shall not exceed the
amount authorized in the financing order.

(2) Prior to the issuance of system restoration
bonds under this act, the State Bond Commission shall request that the State
Treasurer establish necessary system restoration bond sinking funds as provided
in Section 10 of this act.

(3) Any investment earnings on amounts deposited
into the Hurricane Katrina Electric Utility Customer Relief and Electric
Utility System Restoration Fund created in Section 9 of this act shall be used
to pay debt service on bonds issued under this act, in accordance with the
proceedings authorizing issuance of such bonds.

SECTION 12. The principal of and interest on the bonds
authorized under this act shall be payable in the manner provided in this
section. Such bonds shall bear such
date or dates, be in such denomination or denominations, bear interest at such
rate or rates (not to exceed the limits set forth in Section 75-17-101), be
payable at such place or places within or without the State of Mississippi,
shall mature absolutely at such time or times not less than five (5) years nor
more than twenty-five (25) years from date of issue, be redeemable before
maturity at such time or times and upon such terms, with or without premium,
shall bear such registration privileges, and shall be substantially in such
form, all as shall be determined by resolution of the State Bond Commission.

SECTION 13. The bonds authorized by this act shall be
signed by the Chairman of the State Bond Commission, or by his facsimile
signature, and the official seal of the State Bond Commission shall be affixed
thereto, attested by the Secretary of the State Bond Commission. The interest coupons, if any, to be attached
to such bonds may be executed by the facsimile signatures of such
officers. Whenever any such bonds shall
have been signed by the officials designated to sign the bonds who were in
office at the time of such signing but who may have ceased to be such officers
before the sale and delivery of such bonds, or who may not have been in office
on the date such bonds may bear, the signatures of such officers upon such
bonds and coupons shall nevertheless be valid and sufficient for all purposes
and have the same effect as if the person so officially signing such bonds had
remained in office until their delivery to the purchaser, or had been in office
on the date such bonds may bear.
However, notwithstanding anything herein to the contrary, such bonds may
be issued as provided in the Registered Bond Act of the State of Mississippi.

SECTION 14. All bonds and interest coupons issued under
the provisions of this act have all the qualities and incidents of negotiable
instruments under the provisions of the Uniform Commercial Code, and in
exercising the powers granted by this act, the commission shall not be required
to and need not comply with the provisions of the Uniform Commercial Code.

SECTION 15. The State Bond Commission shall act as the
issuing agent for the bonds authorized under this act, prescribe the form of
the bonds, advertise for and accept bids, issue and sell the bonds so
authorized to be sold, pay all fees and costs incurred in such issuance and
sale, and do any and all other things necessary and advisable in connection
with the issuance and sale of such bonds.
The State Bond Commission is authorized and empowered to pay the costs
that are incident to the sale, issuance and delivery of the bonds authorized
under this act from the proceeds derived from the sale of such bonds. The State Bond Commission shall sell such
bonds on sealed bids at public sale, and for such price as it may determine to
be for the best interest of the state, but no such sale shall be made at a
price less than par plus accrued interest to the date of delivery of the bonds
to the purchaser. All interest accruing
on such bonds so issued shall be payable semiannually or annually; however, the
first interest payment may be for any period of not more than one (1) year.

Notice
of the sale of any such bonds shall be published at least one time, not less
than ten (10) days before the date of sale, and shall be so published in one or
more newspapers published or having a general circulation in the City of
Jackson, Mississippi, and in one or more other newspapers or financial journals
with a national circulation, to be selected by the State Bond Commission.

The
State Bond Commission, when issuing any bonds under the authority of this act,
may provide that bonds, at the option of the state, may be called in for
payment and redemption at the call price named therein and accrued interest on
such date or dates named therein.

SECTION 16. The bonds issued under the provisions of
this act shall be payable from the appropriate sinking fund established
pursuant to Section 10 of this act and are general obligations of the State of
Mississippi, and for the payment thereof the full faith and credit of the State
of Mississippi is irrevocably pledged.
If the funds available in the appropriate sinking fund and any funds
appropriated by the Legislature for such purpose are insufficient to pay the
principal of and the interest upon such bonds as they become due, the
deficiency shall be paid by the State Treasurer from any funds in the State
Treasury not otherwise appropriated.
All such bonds shall contain recitals on their faces substantially
covering the foregoing provisions of this section.

SECTION 17. Upon the issuance and sale of bonds under
the provisions of this act, the State Bond Commission shall transfer the
proceeds of any such sale or sales to the special fund created in Section 9 of
this act. The proceeds of such bonds
shall be disbursed solely as provided in Section 9 of this act.

SECTION 18. The bonds authorized under this act may be
issued without any other proceedings or the happening of any other conditions
or things other than those proceedings, conditions and things which are
specified or required by this act. Any
resolution providing for the issuance of bonds under the provisions of this act
shall become effective immediately upon its adoption by the State Bond
Commission, and any such resolution may be adopted at any regular or special
meeting of the commission by a majority of its members.

SECTION 19. The bonds authorized under the authority of
this act may be validated in the Chancery Court of the First Judicial District
of Hinds County, Mississippi, in the manner and with the force and effect
provided by Chapter 13, Title 31, Mississippi Code of 1972, for the validation
of county, municipal, school district and other bonds. The notice to taxpayers required by such
statutes shall be published in a newspaper published or having a general
circulation in the City of Jackson, Mississippi.

SECTION 20. Any holder of bonds issued under the
provisions of this act or of any of the interest coupons pertaining thereto
may, either at law or in equity, by suit, action, mandamus or other proceeding,
protect and enforce any and all rights granted under this act, or under such
resolution, and may enforce and compel performance of all duties required by
this act to be performed, in order to provide for the payment of bonds and
interest thereon.

SECTION 21. All bonds issued under the provisions of
this act shall be legal investments for trustees and other fiduciaries, and for
savings banks, trust companies and insurance companies organized under the laws
of the State of Mississippi, and such bonds shall be legal securities which may
be deposited with and shall be received by all public officers and bodies of
this state and all municipalities and political subdivisions for the purpose of
securing the deposit of public funds.

SECTION 22. The Attorney General of the State of
Mississippi shall represent the State Bond Commission in issuing, selling and
validating bonds provided for in this act.

SECTION 23. Upon an application by an electric utility
to the commission pursuant to Section 4 of this act and the issuance of a
financing order by the commission, the State Bond Commission shall, upon the
request of the electric utility, issue refunding bonds for the purpose of
paying any system restoration bonds at or prior to their maturity or upon
acceleration or redemption. Refunding
bonds may be issued at such time prior to the maturity or redemption of the
refunded bonds as the commission and the State Bond Commission may
determine. The refunding bonds shall be
issued pursuant to the Mississippi Bond Refinancing Act, Section 31-27-1 et
seq.

SECTION 24. Bonds issued under the provisions of this
act and income therefrom shall be exempt from all taxation in the State of
Mississippi.

SECTION 25. The proceeds of the bonds issued under this
act shall be used solely for the purposes herein provided, including the costs
incident to the issuance and sale of such bonds.

SECTION 26. The State Treasurer is authorized, without
further process of law, to certify to the Department of Finance and
Administration the necessity for warrants, and the Department of Finance and
Administration is authorized and directed to issue such warrants, in such amounts
as may be necessary to pay when due the principal of, premium, if any, and
interest on, or the accreted value of, all bonds issued under this act; and the
State Treasurer shall forward the necessary amount to the designated place or
places of payment of such bonds in ample time to discharge such bonds, or the
interest thereon, on the due dates thereof.

SECTION 27. (1)
System restoration charges shall not be included within the gross
revenues of the electric utility in the calculation of any franchise fees
pursuant to Section 77-3-17 or pursuant to any franchise fee agreement between
any electric utility and any municipality.

(2) Nothing in this act shall be construed or
interpreted as lessening or reducing the rights and privileges of an electric
utility set out in Section 79-23-1 and in the Mississippi Uniform Trade Secrets
Act, Section 75-26-1 et seq., and in the rules and regulations of the Public
Service Commission implementing the provisions of such statutes.

SECTION 28. The state pledges to and agrees with
bondholders, the owners of the system restoration property, and other financing
parties that the state will not:

(a) Alter the provisions of this act which make
the system restoration charge imposed by a financing order irrevocable; or

(b) Except as allowed under this act, reduce,
alter or impair the system restoration charge that is to be imposed, collected
and remitted for the benefit of the bondholders and other financing parties
until any and all principal, interest, premium, financing costs and other fees,
expenses or charges incurred, and any contracts to be performed, in connection
with the related system restoration bonds have been paid and performed in full.

SECTION 29. The provisions of this act shall be deemed
to be full and complete authority for the exercise of the powers therein
granted, but this act shall not be deemed to repeal or to be in derogation of
any existing law of this state.

SECTION 30. This act shall take effect and be in force
from and after its passage.